B.C. turning corner on prolonged resource bear market

Province’s exploration spending up in 2017 for the first time since 2012: AME Roundup

More than 100 mines are either under construction or in development in Canada, said Kim Rudd, right, parliamentary secretary to the minister of Natural Resources Canada | AME

The numbers are in, and mining and mineral exploration in Canada are in recovery following a prolonged commodities bear market.

Canada-wide, 101 new mine projects are either under construction or in development, which, if all built, would represent a capital investment of $80 billion, according to Kim Rudd, parliamentary secretary to the minister of Natural Resources Canada.

Mining in B.C. produced an additional $3.9 billion in 2017 compared with 2016, and an additional $46 million was spent on exploration, Gordon Clarke, director of mineral development for the B.C. Ministry of Energy, Mines and Petroleum Resources, said at last week’s annual Association for Mineral Exploration (AME) Roundup conference.

According to Clarke, mining in B.C. generated $9.8 billion in 2017. Metallurgical coal accounted for 61%, copper 23%, gold 7% and other industrial metals and minerals 5%. B.C. is Canada’s largest producer of copper and met coal and its only producer of molybdenum. There are currently seven open-pit metallurgical coal mines in operation in B.C., and eight producing metal mines, the newest being the Pretium Resources Inc. (TSX:PVG) Brucejack gold mine, which went into production in July 2017.

A critical part of mining is exploring for new deposits. Exploration spending in B.C. was up slightly in 2017 – $246 million, a $41 million increase over 2016.

That’s less than half what it was in 2012 – $680 million – when exploration spending peaked, before starting a four-year slide.

“Significantly, this is the first increase since 2012, so hopefully we are turning the corner,” Clarke said.

Clarke also noted several acquisitions and investments in later-stage development projects, as well as mine restarts, as indicators that investment in early-stage exploration and development is on its way back up. Nyrstar, for example, recently raised US$118.5 million to restart its Myra Falls polymetallic mine on Vancouver Island.

But the exploration sector in Canada, and B.C. in particular, faces uncertainties from changing regulatory landscapes and high operating costs.

Ottawa and Victoria are reviewing and revamping their environmental review processes.

Rudd promised that Ottawa’s new environmental review process will be a benefit to the mining sector, not a roadblock, and will be based on the principle of “one project, one assessment.”

“We will be unveiling these details very soon,” Rudd said. “But I can tell you now that they reflect our belief that an open, transparent and predictable approach to reviewing new resource projects is critical to both public and investor confidence.”

B.C.’s NDP government is also reviewing provincial environmental review processes, as well as the professional reliance model, which puts the onus for engineering and environmental studies on industry – a practice called into question following the Mount Polley tailings pond collapse.

At a Roundup panel discussion on government and industry relations, George Heyman, minister of environment and climate change, offered assurances that his government’s new policies and regulatory reviews were aimed at restoring public trust and providing greater certainty.

He said public trust in the process had eroded over the years, which has led to court challenges and delays in getting approvals.

“There are assessments that have taken years, in which there’s been tremendous uncertainty, as well as disconnects between federal assessment process and provincial assessment processes that really haven’t helped anyone,” Heyman said.

As for reviewing the professional reliance model, it appears the government plans to tweak the model, not scrap it.

“We’re not reviewing it with a view to dismantling it or to replace it by going back 30 years to a system where everything was done by government,” Heyman said. “But what we are trying to do is to ensure, by working with the professional associations, that there are robust standards in place around ethics, around conflict of interest, around training, around qualifications in subfields as well as upgrading, and that we ensure within government that we have sufficient capacity to provide some oversight.”

Despite a changing regulatory landscape in B.C., Mark O’Dea, CEO of Oxygen Capital, which recently acquired a B.C. mineral project called Stardust north of Fort St. James, isn’t worried about doing business in B.C.

“It appears that the premier is highly supportive of natural resources in B.C.,” he said, adding that cutting PST on electricity for mines is one example of support the industry is getting. “I feel like the tone from the top is very supportive.”

See related stories, Mining Gets Back on the Bull and More Major Mines Tapping Indigenous Labour Force.

nbennett@biv.com

@nbennett_biv